Why Do Major-League Baseball Players Get Paid More Than Minor-League

question 45

Multiple Choice

Why do major-league baseball players get paid more than minor-league players?

• A)Major-league players are better athletes.
• B)The higher wage reflects a compensating differential.
• C)Playing in the major leagues in more pleasant then playing in the minor leagues.
• D)The higher wage is often due to educational discrepancies.

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Definitions:

Income Effect

The change in consumption resulting from a change in real income, typically due to a price change of goods or services.

Marginal Satisfaction

The change in satisfaction or utility that a consumer experiences from consuming an additional unit of a good or service.

Utility-Maximizing

The economic principle that consumers choose combinations of goods and services to maximize their satisfaction or utility under budget constraints.

Economic Theory

A set of principles and models that explain how economic agents interact and how economies function.